Strategic Communication Imperative

The Strategic Communication Imperative

S P R I N G 2 0 0 5 V O L . 4 6 N O. 3

R E P R I N T N U M B E R 4 6 3 1 5

Paul A. Argenti, Robert A. Howell and Karen A. Beck

P l e a s e n o t e t h a t g ra y a re a s re f l e c t a r t w o rk t h a t h a s b e e n i n t e n t i o n a l l y re m o v e d . T h e s u b s t a n t i v e c o n t e n t o f t h e a r t i c l e a p p e a rs a s o ri g i n a l l y p u b l i s h e d .

he link between strategy and its implementation has always been tenu-

ous. Top consulting companies have employed countless MBAs to

develop strategy for their clients. Academics at top business schools have

spent their careers developing frameworks explaining how to develop better

strategies for top companies. However, only a handful of academics and a

cadre of tactical consultants, primarily at public relations companies, have

struggled with strategy implementation in the area where it matters most: its

communication to a set of varied constituents.

Many companies take a tactical, short-term approach to communicating

with key constituencies, which is not only nonstrategic but may be inconsis-

tent with the corporate strategy or even impede it. Exxon Corp.’s decision in

1989 to remain silent for days after the Exxon Valdez ran aground in Alaska’s

Prince William Sound, AT&T Corp.’s decision to permanently lay off 40,000

employees on the first business day of 1996, a CFO’s decision to avoid notify-

ing senior managers about a downgrade of the company’s stock by a major

investment bank and, more recently, Merck & Co. Inc.’s decision to wait until

pressured to pull Vioxx, its arthritis and acute pain medication, from the mar-

ket are all examples of communications being used tactically as part of a

short-term legal or financial orientation. However, the dearth of both aca-

demic and practitioner emphasis on the strategic nature of communications,

coupled with recent legal and regulatory responses to corporate scandals

(such as enactment of Regulation Fair Disclosure and the Sarbanes-Oxley Act

of 2002), has created a strategic communication imperative — an increasingly

urgent need for executives to ensure that their communications practices con-

tribute directly to corporate strategy implementation.

We define strategic communication as communication aligned with the

company’s overall strategy, to enhance its strategic positioning. (See “The

Framework for Strategic Communication,” p. 85.) Over the past year, we

conducted primary research into strategic communication, conducting

more than 50 interviews with CEOs, CFOs, heads of corporate communica-

tions and investor relations, and others from a dozen companies represent-

ing different industries, market capitalizations and approaches to

organizing their communications efforts. To research the concept that

strategic communication is inextricably linked to corporate strategy, we

asked these executives about their communications strategies and tactics.

SPRING 2005 MIT SLOAN MANAGEMENT REVIEW 83

The Strategic Communication Imperative

Paul A. Argenti is professor of corporate communication at the Tuck School of Busi- ness, Dartmouth College. Robert A. Howell is a distinguished visiting professor of business administration at the Tuck School of Business. Karen A. Beck is a consultant with Boston Consulting Group. Contact them at [email protected], Robert. [email protected] and [email protected].

T

Companies that con-

tinue to take a tactical,

short-term approach to

communicating with key

constituencies will find

it increasingly difficult

to compete. Developing

an integrated, strategic

approach to communi-

cations will be critical

to success.

Paul A. Argenti, Robert A.

Howell and Karen A. Beck

84 MIT SLOAN MANAGEMENT REVIEW SPRING 2005

The research not only indicates the drivers, best practices and

lessons of strategic communication, but it also suggests that

when companies take a strategic approach to communication,

communication becomes integral to the formulation and

implementation of strategy. (See “About the Research.”)

We found that the companies most likely to recognize the

strategic communication imperative are those in which the

CEO has an inherent understanding of how communication

can be a differentiator for a business and thus can drive strategy.

Executives at PepsiCo Inc. and Dell Inc., for example, are keenly

aware of the need for a strategic approach to communications.

Dell chairman Michael Dell says, “I communicate to customers,

groups of employees and others, while working on a strategy. A

key part of strategy is communicating it. Communications is

key to operations and execution and an integral part of the

process.” PepsiCo president and CFO Indra Nooyi puts it

cogently: “You only have to go through one or two communica-

tions debacles as a senior executive to understand the impor-

tance of communications.”

This indicates that communications professionals need to

have a seat at the strategy-making table. Indeed, the communica-

tions professionals we met with agreed that their job was not only

to reinforce and help implement the company’s strategy by com-

municating with key constituencies but also to interpret con-

stituency responses in ways that inform strategy going forward.

“The communication function supports the businesses and

brand-building efforts,” says Tod MacKenzie, senior vice presi-

dent of corporate communications at PepsiCo. “It moves the

organization. The messages articulate the strategic direction of

the company and motivate people to move behind it.”

Best Practices of Strategic Communication Strategic-communication leaders allow their corporate strategy

to drive their communication choices. They are equally adept at

tailoring their communication activities to support existing strat-

egy or drive new strategy.

FedEx The emphasis placed on communications at FedEx is reflected in the amount of time executives devote to it. T. Michael

Glenn, president and CEO of FedEx Services, says, “Communica-

tion is at the center of everything. You can’t execute strategy if you

can’t communicate about it. … The communication philosophy

goes back to [founder] Fred [Smith] and his military training. His

management philosophy is ‘Shoot, move, communicate.’”

For example, when the economy took a downward turn a few

years ago, FedEx, like many companies, determined it had to lay off

employees. But FedEx realized that the goodwill and morale of its

employees is central to the success of its exceedingly customer-fac-

ing strategy. The company not only offered generous voluntary

severance packages to its departing employees, but it clearly com-

municated this both internally and externally using a multifaceted

approach across a variety of platforms to maintain employees’ loy-

alty, customers’ trust and the good graces of Wall Street.

“It was like changing a tire on a moving truck because an

entirely new organizational structure was being developed and

communicated in phases to nearly 13,000 employees,” says Bill

Margaritis, corporate vice president of worldwide corporate

communications. “We worked with our HR group and external

suppliers on numerous highly detailed and personalized commu-

nications to those eligible for early retirement or voluntary sever-

ance. We created a number of two-way communication channels

to answer employee questions including various hot lines and

Web sites where we collected questions and answered them for all

employees to read. And each of those processes had to be coordi-

nated with the others.”

According to Eric Jackson, vice president of corporate com-

munications, “FedEx is now held up as an example of how to

transition, of how to keep the hearts and minds of employees

while meeting business needs.”

Textron Textron was one of the original highly diversified “growth by acquisition” conglomerates. Over the years, Textron

has acquired, merged with and divested itself of dozens of com-

Our primary research into strategic communications com-

prised more than 50 individual interviews, conducted one-

on-one and in person, by all three members of our research

team over a period of six months. Our selection of compa-

nies included those representing the state of the art in cor-

porate communications (Dell, FedEx and Pepsi), companies

that have faced and survived major crises (Cendant, Knight

Trading and Textron), and some unsung heroes (Cognex,

Infosys, Jet Blue, the New York Times Co. and Playboy Enter-

prises) that are great corporate communicators, but not

usually recognized for their efforts. We also included a

pharmaceutical company (GlaxoSmithKline), given the for-

midable communications issues in that industry.

At each company, we met with (at least once) the CEO,

CFO, chief communication officer and investor relations

officer. The interviews were structured in advance, but

often veered from the initial questions. We did, however,

ask each executive key questions about the role of commu-

nication in strategy formulation and implementation, com-

munication strategy, how the function is structured in their

companies, what process exists for communication and

what role they play in communicating, including how

much time they spend on this activity. Interviews were set

for an hour but often lasted as long as three hours.

About the Research

SPRING 2005 MIT SLOAN MANAGEMENT REVIEW 85

panies. Today, its principal businesses include Bell Helicopter,

Cessna Aircraft, Textron Fastening Systems and Textron Finan-

cial. One of the repercussions of such frenetic buying and selling

was the absence of common systems, procedures and a shared

culture across the corporation. Despite these internal hurdles,

Textron rode the wave of the buoyant market during the 1990s,

only to watch its stock fall by 80% when the bubble burst in the

stock market.

“The core of our existence was shaken,” says chairman, presi-

dent and CEO Lewis Campbell. He realized he had to articulate a

new vision and strategy for Textron — to become the premier

multi-industry company in the world recognized for its world-

class enterprise processes — and that selling it internally and

externally would require a coordinated communications effort.

“We moved from a ‘want to’ communicate to a ‘have to.’ The only

way to show the commitment is to communicate with passion,

face-to-face, all the time with the same message.”

To date, the process has been focused internally to get align-

ment and commitment from within. Prior to the transforma-

tion, the business units operated as independent, self-directed

companies. Now, they have to buy into a centralized strategy

and streamlined processes. Textron has hundreds of communi-

cation programs under way to support the “one company”

objective. For example, it holds an annual Corporate Commu-

nications Council to develop one message and incorporate that

message into the business units. In addition, the council holds a

monthly Internet teleconference to ensure compliance. At an

even more tactical level, all relevant press releases are reviewed

at the corporate level as well.

For Textron, strategic communications came in the form of

harnessing the power of the CEO and other senior executives to

communicate the message both internally and externally in a

time of incredible transformation. Campbell is using commu-

nications to disseminate his new vision and strategy throughout

the corporation, while at the same time keeping the financial

community apprised of the company’s progress at implement-

ing its new strategy.

Dell Founded by Michael Dell in his dorm room at the University of Texas in 1984, Dell Inc. generates more than $49 billion in

annual sales, has 55,000 employees and does business in every cor-

ner of the world by selling directly to end users. The phrase “Dell

Direct” not only describes the company’s business model, but it is

about as clear a unifying communications statement as a company

could possibly have. It defines how Dell relates to its customers, its

employees, its competitors and its shareholders. This concise and

straightforward ethos also characterizes the company commit-

ment to and attitude toward strategic communications. “Com-

munications are an essential part of what you have to offer to

customers and shareholders,” says Michael Dell. “Communica-

tions has to be in the center to be optimally effective.”

For Dell, strategic communication means functional integra-

tion. CEO Kevin Rollins uses communications to create alignment

among strategy, messages, employees, Wall Street and the media.

“You have to modify messages by constituency,” says Rollins.

“Which elements of the overall strategy do you want to discuss

with each constituent? The communication function breaks strat-

egy into pieces and sells the right pieces to the right audience.”

Cendant Cendant’s commitment to strategic communication grew out of crisis. One of the foremost providers of travel and

real estate services in the world, the company was created by the

merger of HFS Inc. and CUC International Inc. in December

1997. Cendant was hit hard in April 1998 when it was discovered

that CUC’s financial statements had been overstated by hundreds

of millions of dollars in both revenues and profits. Following this

discovery, the market value of Cendant dropped more than 40%,

threatening the credibility of both the company and chairman

and CEO Henry Silverman and spurring a barrage of questions

from numerous constituencies. How could a company and its

CEO not have conducted adequate “due diligence” to uncover

Strategy

• Sent by messengers

• Sent through media/channels

Messages

Feedback Based on:

• Markets

• Products/ Services

• Research & Development

• Operations

• Finance

• Organization/ Management

Constituents

Including:

• Customers

• Employees

• Shareholders

• Suppliers

• Competitors

• Community

• Other

The framework for strategic communication comprises a wide

variety of iterative loops, encompassing multiple connections

with multiple constituencies on multiple strategic levels.

Those strategic elements include the markets addressed, the

products and services offered in those markets, the underlying

research and development that supports those products and

services, the operations plan to deliver those products and

services, the finances required and the financial practices

needed to assure optimal performance and, finally, the organi-

zational infrastructure, culture and management necessary to

attain that optimal performance.

The Framework for Strategic Communication

86 MIT SLOAN MANAGEMENT REVIEW SPRING 2005

CUC’s fraudulent reporting of this magnitude before the trans-

action was completed?

Silverman realized that, to regain credibility, complete hon-

esty and financial transparency was the only viable course of

action. He established the mantra, “Tell the truth. Tell it all. Tell

it now,” insisting that all the accounting irregularities be

acknowledged as soon as they were known. Silverman and the

company’s senior vice president of corporate communications

and investor relations, Samuel Levenson, continue to tell the

Cendant story as frequently and as clearly as possible to restore

investor confidence in the company. “I can never be far away

from investor relations or public relations. At the end of the day,

I’m accountable,” says Silverman. “You can never overcommu-

nicate. There is no such thing.”

Drivers of Strategic Communication Even if a CEO or CFO does not have an active interest in or inher-

ent understanding of strategic communications, a number of fac-

tors, both external and internal, can necessitate such an approach.

Regulatory Imperatives New regulations often drive companies to revisit communications strategies and practices. In 2000 when

the U.S. Securities and Exchange Commission adopted Regula-

tion Fair Disclosure prohibiting companies from communicating

preferentially with certain outside

parties, particularly analysts, crit-

ics worried that companies might

reduce the amount of informa-

tion they communicated to the

analyst community and other

interested parties. On the con-

trary, companies have developed

regular conference calls and other

procedures to get their message

out fairly and consistently. “Com-

munications now have to be

crisper and give more clarity,” says

Ted French, executive vice presi-

dent and CFO of Textron Inc., on

the topic of Reg FD.

The Sarbanes-Oxley bill requir-

ing that CEOs and CFOs certify

their companies’ financial results

and attest to systems of internal

controls, also has changed the way

companies communicate. Sar-

banes-Oxley and the move toward

transparency has pressured com-

panies to make their footnotes to

financial statements more under-

standable and complete and to make the management discus-

sion and analysis section of annual reports more comprehensible

and accessible.

Organizational Complexities As an organization grows in size and complexity — more markets, customers, products, services,

employees, suppliers, investors and so on — the need for a con-

sistent communications strategy becomes even more critical

because it must communicate to a diverse and rapidly expanding

array of constituents while remaining relevant to all.

“In a large, complex company with multiple operating units

such as ours, all the pieces get lumped together and are viewed

negatively,” says Ronald Nelson, Cendant Corp. president and

CFO. “Some investors say, ‘Cendant’s too complicated — forget

it!’ And that is exactly what we have to respond to.”

“As Dell matured,” says Michael Dell, “we had to put a pre-

mium on making sure we had communication nailed down.

While we’ve done a better job in the last couple of years, there

were times when communications wasn’t well integrated, partic-

ularly over parts of the worldwide operations. As a global busi-

ness, it is essential that we have a clear, consistent strategy.”

The Need to Increase Credibility Corporate crises, both internal and external, also can drive companies to reconsider how they

communicate. In the high-flying 1990s, “making the quarterly

earnings estimate” became a dangerous mantra for some compa-

nies. Enron Corp.’s incessant drive to do so led to its demise.

Xerox Corp. overstated sales and lost 90% of market value when

the real numbers became clear. The bursting of the bubble and

the corporate crises that followed gave new management at many

companies the formidable challenge of restoring credibility.

Recent polls show that over 80% of the American public feel

that business does a poor job of balancing profit and the public

interest.1 In fact, the 2005 Edelman Trust Barometer poll shows

that nongovernmental organizations are held in higher esteem

than businesses, and executives in large companies are among

the lowest rated in terms of credibility, ranking below even

lawyers and government officials.2 Given such low levels of

approval and trust, the need for a more strategic approach to

communication truly becomes imperative as companies strive to

differentiate themselves.

Aligning Communication With Strategy Corporations have multiple constituents, and their communica-

tions must be responsive to all of them. “The job of a senior man-

ager is to determine which elements of the overall strategy you

want to communicate to each constituency,” says Dell CEO Kevin

Rollins. Whether a company is developing a coherent identity for

itself through advertising, is discussing with employees the rea-

sons for a merger and subsequent work-force reductions or is

“Being on mes-

sage is critical,”

says Leonard

Forman, executive

vice president

and CFO of the

New York Times

Co., “but it has

to be based on

something real.”

SPRING 2005 MIT SLOAN MANAGEMENT REVIEW 87

explaining to shareholders why it didn’t meet fourth-quarter pro-

jections, employing a coherent communication strategy is criti-

cal. “We break messages into pieces and try to give the right piece

to the right audience,” says Rollins.

Executives have to think carefully about an organization’s

objectives for each specific communication, determining which

constituencies are critical to meeting that objective and under-

standing what kinds of messages to deliver to them through the

most effective channel. In fact, the message and the messengers

are the critical links between a company’s strategy and the

understanding of and response to that strategy by the com-

pany’s various constituents. (See “Using a Strategic Approach to

Communications.”)

Communications professionals and other executives we spoke

with agree that strategic communication requires clarity and

consistency of message. “Communication has to be able to talk to

people inside and outside the company,” says FedEx Corp. execu-

tive vice president and CFO Alan Graf. “We have to have the same

messages and conflicts.” Repetition is also crucial. “You almost

can’t communicate a message frequently enough, particularly to

the employees,” says Russell Lewis, former president and CEO of

the New York Times Co. “Use every mechanism.” And, perhaps

above all, effective strategic communication is based on truth.

“Being on message is critical,” says Leonard Forman, executive

vice president and CFO of the New York Times Co., “but it has to

be based on something real.”

Channel choice is another integral part of the strategic com-

munication process. Senior managers need to focus on using the

right channel(s) for each message to each constituency. Given the

complexity and array of choices available as distribution channels

today, this offers managers an opportunity to choose on the basis

of the preferences of their constituents, who are more sophisti-

cated than ever before as a result of media exposure, the evolu-

tion of technology and the ability to access communications in

real time. Companies also must realize that there is great overlap

among their various constituencies. Market analysts and suppli-

ers may also be customers. This makes it increasingly important

that companies “speak in harmony.”

Finally, feedback from constituents determines the overall

success of a communication and, more critically, the success-

ful implementation of strategy in general. For example, “In

[investor relations], you get real-time feedback as people vote

every day with their shares,” says Ron Nelson of Cendant. “The

feedback isn’t determinative, but it’s valuable in picking out

what troubles shareholders.”

A strategic communications approach also attempts to tie its

activities to both financial and behavioral outcomes. On the

financial side, senior managers are increasingly interested in

measuring communications activity in terms of market value.

This is in part due to having tighter budgets in a time of limited

resources. But it is also the result of having new techniques and

frameworks that allow managers for the first time to establish

the direct links between a company’s intangible assets and per-

formance.3 “Communications is an intangible, but it adds to

Strategic communications requires an integrated, multilevel approach. Each communication function fulfills specific objectives, is

targeted at specific constituencies that are critical to meeting those objectives and is delivered through the channels most appro-

priate to and effective for those constituencies. To achieve full strategic impact, all communications to all constituencies through all

channels must be customized to a given objective, yet consistent both with one another and the corporate strategy.

Using a Strategic Approach to Communications

COMMUNICATIONS OBJECTIVES CONSTITUENCIES CHANNELS FUNCTIONS PRIMARY SECONDARY

Media relations Public relations, All Media Press releases, crisis management constituencies interviews

Employee communications Internal consensus building Employees Customers, families Town hall meetings, memos, newsletters

Financial communications Transparency, meeting Investors Analysts, media Conference calls, financial expectations CEO/CFO

Community relations Image building Communities NGOs, media Events, speeches, philanthropy

Government relations Regulatory compliance, Regulators Media, customers Lobbying efforts, meeting social expectations one-on-one meetings

Marketing communications Driving sales, building Customers All key Advertising, image constituencies promotions

88 MIT SLOAN MANAGEMENT REVIEW SPRING 2005

our valuation, credibility and the ease with which we enter mar-

kets,” says Dell senior vice president and CFO James Schneider.

Over the next several years, with the development of more

refined frameworks, as well as the creation of industry stan-

dards, the connection between a company’s communications

activities, business outcomes and value creation will be ever

more definable.

Lessons of Strategic Communications Our research suggests there are some basic lessons to be learned

about how communication can add to the process of translating

boardroom strategy to front-line execution, as well as the ability

of communications to support strategy development.

Lesson 1: Senior managers must be involved. The CEO and

other top leaders, including the CFO, must understand the impor-

tance of communication and leverage communications strategi-

cally with all their constituents. Jean-Pierre Garnier, CEO of

GlaxoSmithKline, said it best, “At the end of the day, the commu-

nications aren’t owned by the communication department. You

have to have good executives who can and will communicate.”

While there have been sensational headlines in business pub-

lications about the decline of the charismatic CEO, it is clear

from our interviews that the role of top leaders in communica-

tions actually has expanded in

the past few years. Now, more

than ever, the CEO is not only

the thought leader but also the

face and voice of the company,

setting the tone for the execu-

tive team and the organization

as a whole. Those senior exec-

utives who think that commu-

nications can be delegated to

the head of the corporate

communication function are

mistaken. In fact, in many

companies, the CEO acts, in

effect, as the senior communi-

cations officer of the company.

When asked how much time

he spends communicating,

Dell’s Kevin Rollins said, “Can

you go above 100%?”

Surprisingly, CFOs also are

more involved in the overall

communications activity of

corporations, seemingly as a

result of their connection to

investor relations executives

who sit on the senior executive team. Alan Graf of FedEx says that

“[communication] is the vast majority of my time. I’m either

communicating or thinking about it. I’m an input-driven CFO.

I’m absorbing, translating or communicating.”

As outcomes-based measures of communication continue to

develop, even the most reluctant senior executives will see the

demonstrated value that communications brings to the imple-

mentation of strategy and will recognize the critical role they

must play in that effort.

Lesson 2: Communications must be integrated. Bob Shillman,

president, chairman and CEO of Cognex Corp., a Natick, Massa-

chusetts-based manufacturer of machine vision systems, puts

integration into perspective: “Communication is not a separate

function. It’s hard to separate it out. It’s like a car. What’s the most

important part? An engine can’t get you anywhere without the

wheels. It all has to be integrated.”

Integration develops in a variety of ways. JetBlue Airways, the

budget-oriented airline, achieves integration through the close

connection between its CEO and CFO; the New York Times Co.,

FedEx and Cendant achieve integration by having one person

manage the function; Dell achieves integration through the rela-

tionships developed between corporate communications and

investor relations professionals; and Textron and Infosys Tech-

nologies Ltd., an Indian company focused on outsourcing,

achieve integration through their communications processes.

However structured, communication must be integrated and

adept at delivering a harmonious message to all constituents.

So what can you do to integrate communications activities at

your company? First, realize that while communication is some-

thing that everyone does, the communication function must

ensure that communications emanating from the business units

are aligned with and support the company’s overall strategy.

Martha Lindeman, Playboy Enterprises Inc. senior vice president

of corporate communication and investor relations, says: “[We

integrate] because we’re concerned with maintaining the

integrity of the brand. The brand means different things to dif-

ferent people, and we don’t want counterproductive moves or

multiple divisions pitching to the same media.”

Second, specific messages must sound like they are coming

from the same place leading in the same direction. This is the

concept of “speaking in harmony.” “[Investor relations] and cor-

porate communications are separate functions that work very

closely together,” says GlaxoSmithKline’s Jean-Pierre Garnier.

“But we still have one story here — one basic message.”

Third, think about the opportunities that integration of com-

munications will create, which would otherwise be missed. “Before

investor relations and corporate communications were integrated,”

says Russell Lewis, formerly of the New York Times Co., “we didn’t

have problems, but we failed to take advantage of opportunities.”

In many companies,

the CEO acts, in

effect, as the senior

communications

officer. Asked how

much time he spends

communicating,

Dell’s Kevin Rollins

said, “Can you go

above 100%?”

SPRING 2005 MIT SLOAN MANAGEMENT REVIEW 89

And, finally, pay attention

to detail. Dell is exemplary

in this regard. The company

integrates its communications

activities down to specific mes-

sages, such as the mandate

to “be direct” in all activities,

delivered by specific executives,

including both Michael Dell

and Kevin Rollins, to further a

specific strategic goal.

Lesson 3: Structural integra-

tion is not the only choice.

Some companies strategically

integrate their communica-

tions functions by combining

them under one executive. It is

surprising, however, how often

structural change is not used

as an integrating mechanism.

“Reporting relationships do

not matter as much as infor-

mal relationships in most

organizations,” says Cendant’s

Samuel Levenson.

Communications executives are integral to the extent that

they have a strong personal network, access to information,

awareness of how their work connects to the overall strategy of

the company and the ability to measure its impact on share-

holder value. Senior executives at the companies we studied

were quick to point out attributes such as broad perspective and

personal credibility as the reasons communications executives

earned a seat at the strategy-making table.

Lesson 4: Communications must have a long-term orientation.

It has been suggested that the most enduring companies are

those that focus on the long term, have a strong set of values

and are proactive rather than reactive in communicating.4

Just as companies have long-term marketing and budgeting

plans for the organization as a whole, they also must have a

master communication strategy. For many, however, this is a

difficult task. Most communications professionals are rewarded

for their tactical abilities in the short term (that is, for “get-

ting good ink”). Indeed, their compensation is often tied to

short-term, tactical achievements. Their job, however, is to

meet short-term needs but stay focused on the long-term issues

that will affect the company. There is a clear need in the mar-

ketplace for a measurement framework that connects the two,

a goal succinctly stated by Eric Jackson of FedEx: “It’s not

about meeting next quarter’s numbers. We have 30 years of his-

tory and want 100 more.”

Lesson 5: Top communicators must have broad general man-

agement skills. All too often, the corporate communications

function is a dumping ground for tactical managers who are

uncomfortable with the quantitative skills needed for success in

other functions. But effective communications professionals are

those who speak the same language as senior executives and have

a deep understanding of the business and its strategy. That often

means they have business intuition garnered outside the com-

munication function or from formal education, personal credi-

bility with senior executives, a wide organizational reach,

integrity and a strong leadership position in the company. One of

the best ways to acquire these attributes is to work at building an

informal network of contacts within the company, getting

involved in every aspect of the business. When Lynn Tyson, Dell’s

vice president of investor relations and corporate communica-

tions, first joined the company, she attended operations and

other functional meetings so that she could learn about Dell

inside and out. “For IR to be proactive and effective,” she says, “IR

needs to understand what happens in the company.”

COMPANIES THAT CONTINUE to take a laissez-faire approach to

communication will find it increasingly difficult to compete.

Although there will be a continuing need for tactical execution,

the addition of an integrated, strategic focus will be critical to

success. For communications professionals, this imperative will

not be a threat but an opportunity to not only get a seat at the

table, but to stay there.

ACKNOWLEDGMENTS

The authors would like to thank the National Investor Relations Insti- tute’s Center for Strategic Communication for support of our research.

REFERENCES

1. P.A. Argenti, “Corporate Communication” (New York: McGraw-Hill, 2002), 4.

2. “Trust Shifting From Traditional Authorities to Peers, Edelman Trust Barometer Finds” (New York: Edelman USA, 2005), www.edelman. com/news/ShowOne.asp?ID=57.

3. There is, in fact, growing evidence to suggest that intangibles do drive valuation. A recent study by the Brookings Institution showed that in 1978, 20% of corporate value was attributable to intangible assets, whereas in 1998 that had increased to 80%. See M.M. Blair and S.M.H. Wallman, “Unseen Wealth: Report of the Brookings Task Force on Intangibles” (Washington, D.C.: Brookings Institution Press, 2001).

4. J.C. Collins and J.I. Porras, “Built To Last: Successful Habits of Visionary Companies” (HarperCollins: New York, 1997), 14.

Reprint 46315. For ordering information, see page 1. Copyright © Massachusetts Institute of Technology, 2005. All rights reserved.

“[Investor rela-

tions] and corporate

communications are

separate functions,”

says GlaxoSmith-

Kline’s CEO Jean-

Pierre Garnier.

“But we still have

one story here —

one basic message.”

PDFs ■ Reprints ■ Permission to Copy ■ Back Issues

Electronic copies of MIT Sloan Management Review articles as well as traditional reprints and back issues can be purchased on our Web site: www.sloanreview.mit.edu or you may order through our Business Service Center (9 a.m.-5 p.m. ET) at the phone numbers listed below.

To reproduce or transmit one or more MIT Sloan Management Review articles by electronic or mechanical means (including photocopying or archiving in any information storage or retrieval system) requires written permission. To request permission, use our Web site (www.sloanreview.mit.edu), call or e-mail:

Toll-free in U.S. and Canada: 877-727-7170 International: 617-253-7170 e-mail: [email protected]

To request a free copy of our article catalog, please contact:

MIT Sloan Management Review 77 Massachusetts Ave., E60-100 Cambridge, MA 02139-4307

Toll-free in U.S. and Canada: 877-727-7170 International: 617-253-7170 Fax: 617-258-9739 e-mail: [email protected]

1. Button62:
2. Button63:
3. Button64:
4. Button65: